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Chapter 1: Introduction

Expert Group on Poverty Statics

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Chapter 1

Introduction

By Professor Peter Townsend3

In advancing towards the eradication of poverty and improving the livingconditions of the world population, achieving a better definition of theproblem and devising an internationally comparable approach for itsmeasurement are very important elements. A necessary step in thisprocess is taking stock of current practices in poverty measurement andportraying their advantages and limitations. This task has beenaccomplished by the Rio Group, and the results of its work arepresented in this report. It will contribute to reaching further agreementsabout the measurement of poverty and its importance in theconstruction of more effective policies. It will also offer those with lessexperience in the field the possibility of learning more aboutmethodological options, data requirements and costs.

The topics that I will discuss in this introduction refer to an historicalperspective of the concept of poverty, with reference to what I regard asthe basic characteristics of the evolution of poverty in the last 25 yearsand how policies at the international and national level have influencedthat evolution.

3This introduction has drawn in substantial part from contributions of the author to the

Social Science Encyclopaedia(Adam Kuper and Jessica Kuper, eds.) and World Poverty:New Policies to Defeat an Old Enemy(Peter Townsend and David Gordon, eds.).


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1.1 Poverty - An histor ical perspective

Understanding the different approaches to the measurement of povertyrequires an examination of their historical developments andcircumstances. By building on historical investigations of poverty andinnovations that have been introduced into research and action, therecan be a rational exchange among a majority of people leading toscientific and public agreement. If achieved, this can have great benefits

in the future.

From the earliest days, poverty was related to income, and incomehas remained at the core of the concepts meaning. At this juncture, thisdeserves to be explained. There are advantages in maintaining thatfeature of the concept. But income is itself no less of a problematicconcept than poverty and has to be carefully and precisely elaborated.Once this is done, scientists come to understand why there have beentemptations to stray into other features of meaning. It is a difficult andcostly exercise. If the income equivalent of assets, free public servicesand subsidies to employment have to be added to cash income to arriveat a comprehensive but accurate measure, then the task of assemblingan accurate measure becomes daunting. I will endeavour to explain.

First it will be helpful to summarise the conclusion. When peoplelack or are denied the income and other resources, including the use ofassets and receipt of goods and services in kind equivalent to income,to obtain the conditions of life that is, the diets, material goods,amenities, standards and services to enable them to play the roles,participate in the relationships and follow the customary behaviourwhich is expected of them by virtue of their membership in society, theycan be said to be in poverty. They are deprived because of theirpoverty. The key to understanding is the definition and measurement ofthe two variables that can be shown to be closely related incomeand deprivation. The determination of a poverty line cannot be basedon an arbitrary selection of a low level of income. Only scientific criteriaindependent of income can justify where the poverty line should bedrawn. The multiplicity and severity of different types of deprivation canconstitute those criteria. The aim of investigation is therefore to define athreshold of income below which people are found to be increasinglydeprived. The two measures are not easily decided. The relevantmeasure of income should include the value of assets and income inkind that can be treated as equivalent to income resourcessometimes being used to denote this wider interpretation. Secondly, themeasure of multiple deprivation must be decided on the basis ofevidence about each and every sphere of human activity (again, notarbitrarily chosen spheres): at work, where the means that largelydetermine an individuals position in several spheres of activity are


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earned; at home, in a persons neighbourhood and family; during travel;and in a range of social and individual activities outside work and thehome or neighbourhood where people perform a variety of roles infulfilment of social obligations. The degree of material and socialdeprivation relative to income is the basis for the relative deprivationmethod of ascertaining the threshold amount of income ordinarilyrequired by households of different compositions to surmount poverty.The application of this method permits conclusions to be reached about

trends in poverty in and across different countries (Townsend, 1979, p.31; 1993, pp. 33-36). In the twenty-first century, this approach can allowa scientific and international consensus to finally be reached about theconcept and its uses.

There are historical antecedents that have to be traced andqualifications that have to be made in reaching the above conclusion.The understanding and relief of poverty have been a majorpreoccupation of human beings for many centuries. In England, variouslaws to regulate and maintain the poor were enacted before the time ofElizabeth I (Lambarde, 1579), and the first recorded body ofCommissioners for the Poor started work in 1630 (HM, 1630).

Attempts were made both to assess conditions throughout England and

to trace corresponding conditions across Europe (see, for example,Eden, 1797; Himmelfarb, 1984; and Woolf, 1987). In the late eighteenthcentury, governments and ruling groups grudgingly came to feel obligedto define the needs of the poor in relation to the income of the poor. InBritain and much of Europe, those in charge of small areas, such asparishes, developed forms of indoor and outdoor relief for the poor longbefore the industrial revolution. Economies newly based onmanufacturing industries and a wage system posed new problems ofestimating and regulating the amounts to be received by the pooroutside as well as inside Poor Law institutions. The costs of maintaininginstitutions and their inmates had been a cause of concern for rulinggroups and figured in the formulation of a new scheme to manage thepoor starting in 1834 in Britain. The principle of less eligibility " played acrucial part in the thinking both of politicians and those undertakingscientific enquiries.

The first and most essential of all conditions, a principle which wefind universally admitted, even by those whose practice is at variancewith it, is, that [the paupers] situation on the whole shall not be madereally or apparently so eligible as the situation of the independentlabourer of the lowest class" (Report from His Majesty's Commissioners,1834, p. 228).

The rate-payers wanted the costs of maintaining the able-bodiedand non-able-bodied poor to be kept as low as possible. Those incharge of the economy and many employers wanted the poor to beprepared to accept the lowest wage rates on offer. The history of


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poverty has not been one of a dispassionate search for the preciseamount of resources required to surmount deprived conditions of life,but one of continuing struggle between dispassionate investigation andthe prejudiced certainties of those who have accumulated valuable fixedinterests. Compromises were reached both about necessary incomeand the extent of appropriate investigation. Sometimes limited relief wasprovided in the form of bread and other benefits in kind, and sometimesin cash, or a mixture of cash and bread, especially for the non-

institutionalized poor. Need, and therefore the benefits to meet need,depended on perceptions of how many of the poor were deserving.But with the enlightenment and the evolution of the modern industrialState, there were demands for the rationalisation of the methods andamounts of relief that were deemed to be customary.

For such reasons, governments and administrators becameconcerned with defining the minimum needs of institutional inmates andof the able-bodied poor outside institutions. They sought justification fortheir decisions from independent scientific enquiries. The early work ofnutritionists in Germany, the United States and Britain addressed suchquestions. In Germany, for example, there was the work of Kuczynskiand Zuntz (see Leibfried, 1982; Hoffmann and Leibfried, 1980; and

Leibfried and Tennstedt, 1985). In the United States, historical work byAronson (1984) also revealed the powerful influence of such earlynutritionists. The scale and variety of nutrients to maintain life becamean important area of public inquiry. A new stage of relatively scientificwork on poverty had arrived.

From the 1880s to the present day, three alternative conceptions ofpoverty have evolved as a basis for international and comparative work.They depend principally on the ideas of subsistence, basic needs andrelative deprivation. In Britain the "subsistence" standard developed intwo stages, first in conjunction with the work of nutritionists by means ofsurveys carried out by entrepreneurs like Rowntree (1901 and 1918)and then in the war years 1939-1945 by means of a report on socialsecurity drawn up by Sir William (later Lord) Beveridge (Beveridge,1942). Formerly, under the old Poor Laws, the needs of the poor hadbeen measured in terms of quantities of bread or bread-flour or theircash equivalent, and in some parishes allowances for the addition ofother necessities had became common practice (see from His Majesty'sCommissioners, 1834, p. 228). Now, as a result of work prompted bythe nutritionists, families were defined to be in poverty when theirincomes were not sufficient to obtain the minimum necessaries for themaintenance of merely physical efficiency (Rowntree, 1901, p. 86). Afamily was treated as being in poverty if its income minus rent fell shortof the poverty line. Although allowance was made in calculating theincome level for clothing, fuel and some other items, this allowance was


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very small, and food accounted for much the greatest share ofsubsistence.

The investigations of Rowntree, Bowley and others during the 1890sand the early decades of the twentieth century influenced scientificpractice and international and national policies for the rest of thecentury. Examples are the statistical measures adopted to describesocial conditions, at first within individual countries but later with wide

application by international agencies such as the World Bank.Beveridge's particular interpretation of "subsistence" was carried overinto the post-war years after 1945 as a means of justifying the low ratesof national assistance and national insurance that were then adopted.The idea of subsistence was freely exported to member States of theformer British empire. Thus, the wages of blacks in South Africa werepartly legitimated by the poverty datum line (Pillay, 1973; Maasdorpand Humphreys, 1975). In framing development plans, former colonizedterritories such as India and Malaysia drew heavily on the subsistenceconceptualisation (India, 1978; Malaysia, 1986). In the United States,"subsistence" remains the lynchpin, even if today elaboratelyformulated, of the government's measures of poverty (United StatesDepartment of Health, Education and Welfare, 1976; Fisher, 1998; Citro

and Michael, 1995).

The use of "subsistence" to define poverty later came to be criticized(Rein, 1970; Townsend, 1979). The chief criticism was that, within thatapproach, human needs are interpreted as being predominantlyphysical needs - that is, for food, shelter and clothing - rather than associal needs. According to this argument, people are not simplyindividual organisms requiring replacement of sources of physicalenergy. They are social beings expected to perform socially demandingroles as workers, citizens, parents, partners, neighbours and friends(Lister, 1990). Moreover, they are not simply consumers of physicalgoods but producers of those goods and are also expected to act outdifferent roles in their various social associations. They are dependenton collectively provided utilities and facilities. These needs applyuniversally and not merely in the rich industrial societies. The lack ofelaborate social institutions and services in low-income countries andtheir scant resources direct our attention to whether or not the mostbasic material subsistence needs can be met in those countries.Meeting such needs as the satisfaction of hunger is widely accepted asa priority. Such needs have been included in the categorisation ofabsolute poverty. Further research has, however, shown that theadjective absolute would better be replaced by extreme or severe.

And physical needs turn out, upon examination, to be subject to rapidchange because of shifts in patterns of activity and the socialconstruction of successive forms of material consumption. Materialgoods are not, after all, fixed or unvarying. And even the amount andkind as well as the cost of the food that is eaten depends on the roles


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people play and the dietary customs they observe socially. So, in thefinal analysis, material needs turn out to be socially determined indifferent ways.

By the 1970s a second formulation that of "basic needs" beganto exert wide influence. Basic needs were said to include two elements.First, certain minimum requirements of a family for private consumption:adequate food, shelter and clothing, as well as certain household

furniture and equipment. And second, essential services provided byand for the community at large, such as safe drinking water, sanitation,public transport and health care, education and cultural facilities (ILO,1976, pp. 24-25; and ILO, 1977). Particularly in rural areas, the conceptof basic needs was also extended to include land, agricultural tools andaccess to farming.

The concept of "basic needs" played a prominent part in asuccession of national plans fostered by the big powers and byinternational agencies (see, for example, Ghai and others, 1977 and1979) and in international reports (see , for example, UNESCO, 1978;and the Brandt Report, 1980). Evidently the term is an extension of thesubsistence concept. In addition to material needs for individual

physical survival and efficiency, there are the facilities and services forhealth care, sanitation and education required by local communitiesand populations as a whole.

The attractions of the "subsistence" concept included its limitedscope and therefore limited implications for policy and political action. Itseemed easier to restrict the meaning of poverty to material andphysical needs than to also include the non-fulfilment of social roles,given the overriding emphasis on individualism within the revival of neo-classical economics and liberal-pluralism. The attraction of the "basicneeds" concept, on the other hand, has been the emphasis onestablishing at least some of the preconditions for community survivaland prosperity in all countries. For example, the initiatives taken by theInternational Labour Organization (ILO), World Health Organization,

United Nations Childrens Fund (UNICEF) and United NationsEducational, Scientific and Cultural Organization (UNESCO) in their roleof expanding access to basic health and education, or addressing theneeds of children, have advanced this process. At certain times this hasinvolved such organisations in major struggles. However, the more thatsocial aspects of needs come to be acknowledged, the more it becomesnecessary to accept the relativity of need to the world's as well as tonational resources, because as time passes these are increasinglyfound to be under the control of transnational companies andinternational agencies. The more the concept of poverty is restricted tophysical goods and facilities, the easier it is to argue that the growth ofmaterial wealth nationally is enough to deal with the phenomenon and


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that a complex combination of growth, redistribution and reorganisationof trading and other institutional relationships involving the reconstitutionof traditional institutions and the addition of new social associations isunnecessary.

In the late twentieth century, a group of social scientists turned to athird social formulation of the meaning of poverty - that of relativedeprivation (Townsend, 1979, 1985 and 1993; Chow, 1982; Bokor,

1984; Mack and Lansley, 1984; Ferge and Miller, 1987; Desai andShah, 1988; Luttgens and Perelman, 1988; Saunders and Whiteford,1989; Lister, 1991; Scott, 1994; Nolan and Whelan, 1996; yen, Millerand Samad, 1996). Some of the authors of this research came toappreciate that peoples subjective reports on their conditions andexperiences correlated reasonably well with painstaking objectiveobservation and offered a short-cut, that was nonetheless reliable, tothose methods of research, which were undoubtedly expensive andtime-consuming (see, especially, Gordon and others, 2000). Althoughsubjective and objective poverty are of course distinct in principle,they overlap in detailed exposition. Methods of inquiry often assume thata continuum exists between the two and that points on that continuumcan be chosen for particular scrutiny and the extraction of information.

Relativity applies to both resources and to material and socialconditions. Societies are passing through such rapid change that apoverty standard devised at some historical date in the past is difficult to

justify under new conditions. People living in the present are not subjectto the same laws and obligations as well as customs that applied to aprevious era. Globalisation is remorselessly interrelating peoples andtheir standards of living at the same time as inequalities are growing inmost countries. There are, therefore, major objections to merelyupdating any historical benchmark of poverty on the basis of some indexof prices. Over many years the "relativity" of meanings of poverty hascome to be recognized, in part if not comprehensively. Adam Smith, forexample, recognized the ways in which "necessities" were defined bycustom in the early part of the nineteenth century, citing the labourer'sneed to wear a shirt as an example (Smith, 1812).

Nor is it enough to describe poverty as a condition applying to thosewhose disposable income is low relative to that of others. This is to failto distinguish conceptually between inequality and poverty. Poverty maybest be understood as applying not just to those who are victims of amaldistribution of resources but, more exactly, to those whoseresources do not allow them to fulfil the elaborate social demands andcustoms which are placed upon citizens of that society in the first place.This is a criterion which lends itself to scientific observation ofdeprivation, measurement and analysis.


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The driving motivation for putting forward the idea of poverty as"relative deprivation" could be said to be both scientific andinternational. There are respects in which the "subsistence" conceptminimizes the range and depth of human need, just as the "basicneeds" concept is restricted primarily to the physical facilities of thecommunities of the Third World. As with any formulation, there areproblems in defining poverty operationally. Under the "relativedeprivation" approach, a threshold of income is envisaged, according to

size and type of family, below which withdrawal or exclusion from activemembership of society become disproportionately accentuated.Whether that threshold exists or not depends on the scientific evidencewhich can be marshalled on its behalf and whether sociological andeconomic approaches may be reconciled (for an introduction to thecontroversy, see Townsend, 1979, Chapter 6; Desai and Shah, 1988;Desai, 1986; Sen, 1983 and 1985; Townsend, 1985; and Townsend,1993, Chapter 6). Reconciliation is some distance away. Despite theinfluence of Sens contributions to development studies, for two decadeshis ideas on capabilities had not penetrated into the mainstream ofpoverty analysis among economists (Kanbur, 2003). There are forms ofimpoverishment, for example through social exclusion, when individualcapabilities to overcome poverty are not at issue. Those capabilities are

also identified as originating within the individual rather than with groupsor nations collectively or being determined externally. Capabilities arealso different from perceptions. Perceptions sometimes offer a valuablecorrection to independent investigation and analysis of behaviour andliving conditions.

While subjective judgements and reports by cross-sections ofpopulation may offer a short-cut to representative calculations aboutpoverty (see, for example, Gordon and others, 2000; Nolan and Whelan,1996; Mack and Lansley, 1984), elaborate objective observation ofbehaviour and of material and social conditions remains the necessaryand fundamental task. Detailed and comprehensive scientificobservation is needed to demonstrate both the extent and severity ofnon-participation among those with low incomes and meagre supplies ofother resources because people play different roles during their livesand may have complex patterns of association.

Attempts by international financial organisations to define povertyoperationally have turned out to be short-term expedients rather thanbeing of continuing value. Thus, the World Bank adopted a rule-of-thumb measure of US$ 370 per year per person at 1985 prices (thedollar a day poverty line) for all the poorest developing countries. Thiswas temporarily convenient as a crude indicator but was notsubsequently converted into the measure said to be necessary by theBank in 1990.


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A consensus on approaches to poverty was in fact reached after theWorld Summit for Social Development in 1995 and was set forth in theCopenhagen Declaration on Social Development and the SummitsProgramme for Action, signed by 117 countries (United Nations, 1995).In planning to defeat poverty, governments agreed to issue frequentreports on the extent of poverty in their own territories that were to bebased on measures of both absolute and overall poverty. This hasthe potentiality to cut through the problem created by the current pursuit

of different regional measures of poverty and act as a bridge forcomparable investigations in countries at different levels ofdevelopment. This will provide genuine measures of the scale ofextreme and overall poverty in the world and of the success or failure ofdifferent policies in alleviating poverty. Consistency of meaning acrossall societies has become the top scientific issue of the twenty-firstcentury. Reports on poverty in poor countries during the late twentiethcentury were more critical, and theoretically more convincing andradical, than those about poverty in rich countries. Ideological self-deception about the absence of poverty was a marked feature of anumber of rich societies after 1939-1945. But the process of socialpolarisation in most countries, in combination with globalisation,suggests that the supposed absence or extremely small extent of

poverty in a number of those countries had been a convenient illusionthat could be maintained no longer. The tendency to restrict meaningsof poverty to particular regions of the world has undermined the powerof the concept. Divergence of meaning has produced, or reflected,divergence in the methodologies of measurement, modes of explanationand strategies of amelioration. As new work on child poverty has shown,empirical data for all countries can now be marshalled consistently inrelation to multiple forms of material and social deprivation (Gordon andothers, 2003).

As this document shows, the current status of poverty measurementdoes not necessarily go together with the evolution of the conceptualtreatment of the problem, as described in the preceding section. Thecriticism of certain approaches presented in this historical perspectiveshould not be transferred mechanically to operational measurement.Absolute (or extreme) poverty lines have become a very widespreadmethod for gauging the barest adequacy of resources, and theirapplication has increasingly moved away from the idea of subsistence,giving more room to needs that are socially determined. The basicneeds approach has also embraced new areas of deprivation that arecloser to the notion of social needs. In fact, in the definition of absoluteor extreme poverty lines and unmet basic needs, many members of theRio Group have introduced methods that capture elements of relativityin the definition of standards. Furthermore, and unfortunately, there aremany countries in which large parts of the population go hungry and


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experience subsistence-related deprivations and where someelementary basic needs continue to be left unaddressed.

1.2 Poverty and policy

The level of world resources is huge and still growing. In 1985, averageworld GDP per person per day was US$ 13.60 and approximatelyUS$ 16 in 2002 (also measured at 1985 prices). These figures show

that there is considerable scope for policies of redistribution to raiseeveryone above the World Banks one dollar per person per day povertystandard.

Nevertheless, there has been a deterioration in terms of world socialproblems, as illustrated by the increase of mass poverty in someregions, sometimes as a direct consequence of avoidable conflict orwar, and the generalized growth of social polarisation. Mass poverty hasremained or become more extensive in some countries in Latin Americaand in Sub-Saharan Africa, especially in those which were formerlycolonies and have undergone civil war and, in some such instances,genocide. Mass poverty has arrived in many countries of the formerSoviet Union, as attested to in a stream of new reports (UNDP, 1998;

Atal, 1999; Braithwaite and others, 2000; UNICEF, 2001). As oneresearch team put it, incomes tumbled, poverty exploded and thesafety net organised around enterprise-provided protection evaporated(Braithwaite and others, 2000, p. 164).

Underlying this account of changes is a deepening social division orstratification, apparent in the growing inequality between and withincountries. Reporting in mid-1999, UNDP found that income inequalityhad increased in most OECD countries during the 1980s and into theearly 1990s. Of 19 countries, only one showed a slight improvement(UNDP, 1999, p. 37). Data on income inequality in Eastern Europe andthe Commonwealth of Independent States indicate that these changeswere the fastest ever recorded. In less than a decade income inequality,as measured by the Gini coefficient, increased from an average of 0.25-

0.28 to 0.35-0.38, surpassing OECD levels (UNDP, 1999, p. 39). InChina disparities are widening between the export-oriented regions ofthe coast and the interior: the human poverty index is just under 20% incoastal provinces but more than 50% in inland Guizhou (UNDP, 1999,p. 3). Other East and South Asian countries that had achieved highgrowth while improving income distribution and reducing poverty inearlier decades, such as Indonesia and Thailand, were similarlyexperiencing more inequality (UNDP, 1999, p. 36). In Latin America thepercentage of the population below the poverty line increased between1980 and 1999 from 40.5% to 43.8% (ECLAC, 2004). The gap betweencountries, as well as within them, has also widened. The latest studiesshow how the trend has accelerated: the average income of the richest


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20% of the worlds population was 30 times as much as the averageincome of the poorest 20% in 1960, but it had risen to 74 times as muchby 1997 (UNDP, 1999, p. 36).

The causes of persisting and growing poverty have beeninsufficiently traced, and much of the analysis has been based on theover-simplistic assumption that, since industrialized countries havelower levels of poverty than developing countries, broad-based GDP

growth on its own will alleviate poverty. Recent World Bank analyses byDollar and Kraay (2000) purport to show that income of the poor riseone-to-one with overall growth, that is, for every 1% increase in GDP,the incomes of the poorest 20% also increase by 1%. They concludedfrom these analyses that public spending on education and health is oflittle benefit to the poor. Nonetheless, scientific analyses of the samedata used by Dollar and Kraay by other researchers have,unsurprisingly, shown that there is no simple relationship between GDPgrowth and the incomes of poor people (Foster and Szkely, 2001). InLatin America long-term figures (1980-1999) for seven countries,including the most populated ones, clearly dispute the contention thatthe poor have maintained their already low share of income distribution.(Sinz and La Fuente, 2001). Indeed, the existence of a trickle-down

effect from growth has become difficult to demonstrate (Newman andThomson, 1989).

In order to understand the deterioration in the living conditions of alarge part of the world, a basic element that needs to be accepted is theincreasing impact of international developments on national subgroupsand local populations. By this I mean to say that familiar problemshaving to do with gender, ageing, disabilities and families with children,for example, now display an overriding influence from internationaldeterminants. I also argue that local problems, such as conflicts in inner-city housing estates, drugs, closure of local factories and unsatisfactoryprivatisations of local services, are generated or enlarged by globalmarket and other international factors.

Major policies of a number of international agencies, nationalgovernments and transnational corporations, for which a powerfulconsensus had been built up during the 1980s and 1990s, include thestabilisation, liberalisation, privatisation and welfare-targeting and safetynet programmes adopted as a result of the worldwide influence ofmonetarist theory. For example, the so-called stabilisation and structuraladjustment programmes that were advocated and supported byinternational agencies have entailed the reduction of subsidies on food,fuel and other goods, retrenchments in public employment, cuts inpublic-sector wages and other deflationary measures. This not onlygenerates recession, but also distributional outcomes that are moreadverse in poorer countries than in industrialized countries, where wagesystems are strongly institutionalized and self-protecting, and where


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long-established social security schemes provide a better cushion fromdownturns in the economy. Policies to cut public expenditure and totarget welfare for the poorest groups have increased inequality andperpetuated poverty, especially in countries where, because ofglobalised trade and the growing influence of transnational corporations,there has been a particularly rapid concentration of wealth.

In recognizing what policies have brought about greater inequality

within and between countries, we have to understand the similarity ofthe programmes that are influencing developments throughout theworld, at the same time as we recognize that they are calculated to varyin extent and force in different regions. Governments as well asinternational agencies are often eager to adopt new names forconformist (rather than convergent) policies, especially when evidencethat they are not working begins to accumulate.

A second element that needs to be considered is the concentrationof hierarchical power. Due to government deregulation and privatisation,often at the behest of international agencies, control of labour marketshas veered away from States and towards transnational corporations.There are serious shortcomings in both national and international

company and social law in relation to transnationals. While suchcorporations are capable of contributing positively to socialdevelopment, one review has found that few of them are doing much ofconsequence. The activities of some have been positively harmful(Kolodner, 1994). Recent books on transnational corporations (see, forexample, Korten, 1996) have been assembling a case that governmentsand international agencies are going to find hard to ignore.

One feature of mergers between companies and the absorption ofoverseas workforces into corporate subsidiaries has to do not just withthe size of the labour force accountable to management, but also withthe development and scale of the hierarchy of pay and rights existing insuch corporations. There are many layers in a workforce consisting ofscores of thousands of employees working full-time, part-time,

permanently and temporarily in 50, 60 or even more countries. This canbe characterized as increasing vertical control while diminishinghorizontal participation and reciprocation. Moreover, the evolvinghierarchy comprises new occupational sets, ranks and classes, whichare manifested internationally as well as nationally and locally.

Privatisation is another element that helps to explain the increasingdegree of social polarisation. It has been argued that privatisation willenhance global market competition, reduce the cost of state andgovernment taxation, and give greater freedom to private companies tomanage their affairs as they want. However, the proponents of this ideahave adopted a very narrow interpretation of the economic good and


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have tended to ignore the fact that economic development is an integralpart of social development. Academic reviews, as in the UnitedKingdom, have failed to furnish evidence of privatisation beingsuccessful in terms of growth and price. There are, indeed, exampleseither way (see, for example, Parker and Martin, 1997).

The last element I would like to mention refers to the shortcomingsof targeting and safety nets. In structural adjustment programmes, an

effort has been made to balance out the unequal social consequencesof liberalisation, privatisation and cuts in public expenditure withproposals to target help for the most vulnerable groups in thepopulation. For some years, and still to a large extent today, this hasbeen presented within the context of means testing. Even if coveragewere poor, large sums of money would be saved if the almost poorwere no longer subsidized by public funds.

Critics have now concluded that many countries which took part inthe Enhanced Structural Adjustment Facility have experiencedprofound economic crises: low or even declining growth, much largerforeign debts and the stagnation that perpetuates systemic poverty.Some IMF studies provide a devastating assessment of the social and

economic consequences of its guidance of dozens of poor nations(Kolko, 1999, p. 53).

The problem is fully applicable to rich countries as well as poorones. The biggest struggle of the coming years is going to be betweenthe restriction of social security, or welfare, largely in relation tomeans-tested benefits. Those who have assembled evidence fordifferent European countries over many years point out that suchpolicies are poor in coverage, administratively expensive and complex,lead to social divisions, are difficult to square with incentives to work andtend to discourage forms of saving.

Policy proposals to cope with these negative trends have beenformulated. For example, Townsend and Gordon (2002) propose a

series of actions as part of the construction of an anti-poverty strategy. Iwill not discuss them here, as they exceed the nature and objectives ofthis Compendium, except for one that directly relates to the subject ofthis book.

A better definition and measurement of poverty are an importantstep towards eliminating it. Therefore, an international poverty linedefining a threshold of income (including the value of income in kind)ordinarily required in different countries to surmount material and socialdeprivation should be agreed upon. As a first step, the agreementreached in 1995 in Copenhagen (United Nations, 1995) to introduce(and monitor) measures of absolute and overall poverty in every countrymust be fulfilled. It is only upon such a baseline that an effective anti-


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poverty strategy can be developed. As a second recommendation, anti-poverty policies must be monitored and evaluated regularly. Furthersteps have to be taken to fulfil the agreements concerning anti-povertymeasures that were reached in 1995 in Copenhagen at the WorldSummit for Social Development and to regularize the publication ofannual anti-poverty reports by governments, as well as thecorresponding reports by the United Nations and the principalinternational financial agencies.

The assessment of poverty-related phenomena and their impact onliving conditions requires studying their consequences for the primarydistribution of income, the labour market, the level and composition ofsocial public expenditure and patterns of consumption, including thevalue that the population attributes to the satisfaction of needs. TheCompendium prepared by the Rio Group on Poverty Statistics includesan in-depth review of procedures for improving those measurementsthat are now in use, together with a guide covering the resources andcosts involved.

1.3 Bibliography

Aronson N. (1984), The Making of the U.S. Bureau of Labor StatisticsFamily Budget Series: Relativism and the Rhetoric ofSubsistence,Evanston, Department of Sociology, NorthwesternUniversity.

Atal, Y. (ed.) (1999), Poverty in Transition and Transition in Poverty:Recent Developments in Hungary, Bulgaria, Romania, Georgia,Russia, Mongolia, New York, UNESCO and Benjamin Books.

Beveridge, William (1942), Social Insurance and Allied Services (TheBeveridge Report), London, Modern History Source Book.

Bokor A. (1984) Deprivation; dimensions and indices, Stratification andInequality, R. Andor and T. Kolosi (eds.), Budapest, Institute for

Social Sciences.

Braithwaite, J., C. Grootaert and B. Milanovic (2000), Poverty and SocialAssistance in Transition Countries, Basingstoke, Macmillan.

Brandt, W. (Chairman) (1980), North-South: A Programme for Survival,London, Pan Books.

Chow N.W.S. (1982), Poverty in an Affluent City: A Report of a Surveyof Low Income Families in Hong Kong, Chinese University ofHong Kong.


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Citro C.F. and Michael R.T. (eds.) (1995), Measuring Poverty: A NewApproach, Panel on Poverty and Family Assistance, NationalResearch Council, Washington D.C., National Academy Press.

Desai M. (1986), On defining the poverty threshold, Excluding thePoor, P. Golding (ed.), London, Child Poverty Action Group.

Desai M. and A. Shah (1988), An econometric approach to the

measurement of poverty, Oxford Economic Papers, No. 40,505-522.

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Documents

Rio Group Compendium-c1